A similar thing happened to us a couple of years ago, but it happened in our garden level finished basement. Our boiler overflowed. It was a blessing in disguise. They did rip out the bottom 12-18" of our drywall, and replaced it. It gave us an opportunity to repaint our walls, and redo the flooring in our family room area. The cats had peeed so much in that room, that we needed to totally strip all the carpet, padding, and then strip and seal the cement. It wasn't something we would have done casually. I begged my husband to do this when I moved in his house, but he just replaced the carpet and pad, and you could still smell the cat pee. We even had to rip out moulding and drywall that smelled like cat pee. TMI, but I got my basement back, and we found a way to exclude the cats from using it as their personal litter box! Yeah, I was a happy camper!

So, I can't really answer your questions about allergy friendly flooring, but they can put wood floors down on cement. My SIL had a wood floor installed on her cement basement floor, and she used it as a dance floor. It looked quite nice. If you are going to do something other than carpet, I'd go with wood. I've seen bamboo floors, and they are nice, but I think if your washing machine ever overflows again, the bamboo gets trashed pretty easily. Well, the same thing happens with carpet too. But if your carpet gets wet and you catch it soon (rip it up and air it out), you can save the carpet but replace the pad. My chiropractor's office got flooded, and they saved the carpet, but their nice bamboo wood reception desk got a little warped at the bottom where the water was.

Someone told me they had problems with the off gassing of their new carpet. They had it cleaned, and it helped a lot. Carpet has a lot of flame retardant in it. We don't know what that does to us, but maybe if allergies are an issue, just have your carpet cleaned after you install it to get the chemicals out if it faster.

Hopefully insurance will cover your costs. We had a different disaster over the weekend, and we are hoping insurance will cover most of our costs. Then, my husband missed his flight to Japan today because of the earthquake in Hawaii. Now I'm really getting off-topic, but things have been weird around here lately, eh?

Claire